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DECREE

ON LIQUOR PRODUCTION AND TRADING

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the June 14, 2005 Commercial Law;

At the proposal of the Minister of Industry and Trade,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decree prescribes liquor and liquor alcohol production and trading, covering investment in, production, import, export, purchase and sale of liquor and liquor alcohol and other activities related to liquor and liquor alcohol production and trading.

Liquor and liquor alcohol are collectively referred to in this Decree as liquor.

Article 2. Subjects of application

This Decree applies to organizations and individuals involved in liquor and liquor alcohol production and trading and related activities in the Vietnamese territory.

Article 3. Interpretation of terms

In this Decree, the terms below are construed as follows:

1. Liquor means alcoholic drinks made through the process of fermentation, whether or not distilled from starch of various cereals or sugar juices of various plants and fruits.

2. Liquor alcohol means an alcohol used for liquor production or preparation with the scientific name Ethanol and the chemical formula C2H5OH.

3. Manual production of liquor means liquor production activities conducted by organizations, households or individuals with simple equipment and on a small scale.

4. Medicated liquor means liquor prepared with materia medica. Materia medica means medicaments made from materials naturally originating from animals, plants or minerals.

Article 4. Principles for management of liquor production and trading

1. Liquor belongs to the group of commodities subject to restricted trading under the States regulations. Organizations and individuals engaged in liquor production or trading (wholesale or retail sale) must have relevant licenses, except for those producing liquor by manual methods for their own consumption. All activities of liquor production or trading must comply with legal provisions.

2. The State performs the unified management of activities of investment in, production, import, export, distribution, labeling, advertisement, quality, good hygiene and safety, environmental protection, fire and explosion prevention and fight in the liquor production and trading and related activities.

3. The State restricts the production of liquor for producers own consumption.

4. Organizations and individuals producing or trading in medicated liquor shall comply with the provisions of this Decree and other relevant regulations of the Ministry of Health.

Article 5. Liquor production planning

1. Liquor production planning is a branch planning incorporated in the master plan on development of the beer, liquor and beverage industry elaborated for the next decade with a vision toward the subsequent decade.

2. The Ministry of Industry and Trade shall assume the prime responsibility for organizing the elaboration, appraisal and approval of the master plan on development of the beer, liquor and beverage industry, covering the planning on nationwide liquor production.

3. Based on the master plan on development of the beer, liquor and beverage industry approved by the Ministry of Industry and Trade, provincial-level Peoples Committees shall organize the elaboration, appraisal and approval of master plans on development of the beer, liquor and beverage industry in their localities, covering planning on liquor production and traditional liquor production villages.

4. The elaboration, adjustment, amendment and supplementation of master plans on development of the beer, liquor and beverage industry must comply with current regulations on management of plans.

Article 6. Recognition of traditional liquor villages

Provincial-level Peoples Committees shall decide on recognition of traditional liquor production villages in their localities under current regulations on recognition of traditional craft villages, ensuring the following conditions:

1. Traditional liquor production villages are identified in local master plans on development of the beer, liquor and beverage industry.

2. These villages shall elaborate and apply common production processes to the production of liquor bearing their brands.

3. Liquor products satisfy all conditions on food quality, hygiene and safety standards and goods labeling applicable to all liquor producers within these villages.

4. These village satisfy environmental protection and fire and explosion prevention and fight standards applicable to all liquor producers within these villages.

5. Recognized traditional liquor production villages shall comply with the provisions of Clauses 2, 3 and 4 of this Article within twelve months after the effective date of this Decree.

6. Recognized traditional liquor production villages shall build, preserve and develop traditional craft village brands.

Chapter II

LIQUOR PRODUCTION

Article 7. Investment in liquor production

1. Investment in liquor production must comply with approved plans. Investment projects not yet incorporated in these plans must be approved in writing by the agency competent to approve plans.

2. Investors of liquor production projects shall strictly comply with legal provisions on investment; construction; food quality, safety and hygiene standards; environmental protection; fire and explosion prevention and fight and other relevant legal provisions.

Article 8. Conditions for grant of liquor production licenses

Conditions for the grant of a liquor production license to an enterprise:

1. It has registered liquor production business.

2. Its liquor production is in line with the approved master plan on development of the beer, liquor and beverage industry.

3. It has machinery, equipment and technological process for liquor production up to food quality, hygiene and safety standards.

4. It satisfies specified conditions on labor safety and sanitation, fire and explosion prevention and fight and environmental protection.

5. It has the right to lawfully own or use liquor product brands in Vietnam.

6. It is staffed with technicians who are professionally qualified for liquor production.

7. Its employees who are personally engaged in liquor production must be physically fit and free from infectious diseases.

Article 9. Liquor production licenses

1. The Ministry of Industry and Trade shall specifically guide the competence, order and procedures for the grant of liquor production licenses.

2. Enterprises may only conduct production or business activities from the time they are granted the licenses.

Article 10. Withdrawal of liquor production licenses

1. A liquor production license is withdrawn in the following cases:

a) The enterprise so requests;

b) The enterprise is dissolved or goes bankrupt under the Law on Enterprises;

c) The enterprise has its business registration certificate revoked;

d) The enterprise fails to satisfy the conditions specified in Article 8 of this Decree;

e) The enterprise fails to commence its operation six months after being granted a production license without any plausible reasons certified by a competent authority;

f) It is detected that the enterprises license application dossier has been intentionally falsified.

2. If the enterprise can once again satisfy the conditions specified in Article 8 of this Decree, it may apply for a renewed liquor production license at least three months after having its liquor production license withdrawn. The procedures for renewal of licenses are the same as those for grant of new licenses.

Article 11. Liquor quality standards

1. Liquor is a commodity product subject to compulsory announcement of quality standards.

2. The order and procedures for elaboration and announcement of manufacturer standards comply with the Ministry of Science and Technology’s guidance.

3. The application of national and international standards of liquor is encouraged.

4. Organizations and individuals representing traditional liquor production villages shall announce manufacturer standards on quality of their liquor products.

5. Quality standards of exported liquor comply with importing countries regulations.

Article 12. Liquor product labels

1. Liquor products may be sold in Vietnam only when labeled with registered trademarks.

2. Liquor products sold in Vietnam must be labeled under legal provisions on labels of food products.

3. For liquor products for export, their labeling must be made at the request of importing countries.

Article 13. Stamps of liquors made in Vietnam and imported liquors

1. Imported liquor products for sale in Vietnam must be stuck with import stamps on their packages under the Ministry of Finances regulations.

2. The Ministry of Finance shall specify the printing, distribution and management of use of import liquor product stamps.

3. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Industry and Trade in, studying and mapping out a schedule for sticking of stamps on liquor products made in Vietnam, and submitting it to the Prime Minister for consideration and decision.

4. Liquor products produced for export, overseas introduction or exhibition must be stuck with stamps under importing countries regulations.

Article 14. Responsibility for supply of information on liquor products

1. Organizations and individuals producing or trading in liquors shall supply information on their liquor products to the mass media when requested by functional agencies. Information on liquor products must clearly state their ingredients and chemical contents and harms of liquor abuse.

2. The Ministry of Culture, Sports and Tourism shall assume the prime responsibility for, and coordinate with the Ministry of Information and Communication in, specifying the responsibility for the supply of information on liquor products to the mass media.

Article 15. Rights and obligations of liquor production enterprises

Apart from the rights and obligations provided for by law, liquor production enterprises have the following rights and obligations:

1. To train staff in charge of fire and explosion prevention and fight, environmental protection and food hygiene and safety under regulations.

2. To strictly comply with regulations on food quality, safety and hygiene standards, and trademarks.

3. To supply information on liquor products in strict compliance with competent state agencies guidance.

4. To observe the reporting regime prescribed by law.

5. To organize medical checks once every 12 months for their employees who are directly engaged in liquor production, ensuring that these persons are free from infectious diseases.

6. To organize their distribution systems in strict compliance with regulations without having to apply for wholesale or retail licenses.

Article 16. Manual production of liquors for commercial purposes

1. Organizations and individuals manually producing liquors are encouraged to join in a traditional liquor production village if they reside in the same locality with this village.

2. Organizations and individuals manually producing liquors for commercial purposes shall make registration of the liquor production business under regulations on business registration.

3. Before January 1, 2010, organizations and individuals manually producing liquors for commercial purposes shall apply for licenses for manual liquor production.

4. Conditions on grant of licenses for manual liquor production:

a) Having certificates of registration of the manual liquor production business;

b) Ensuring conditions on environmental protection; food quality, safety and hygiene; labeling of liquor products specified in this Decree.

5. The Ministry of Industry and Trade shall guide in detail the competence, order, procedures and dossiers of application for grant and withdrawal of licenses for manual liquor production.

6. Rights and obligations of organizations and individuals manually producing liquors for commercial purposes.

Apart from the rights and obligations provided for by law, organizations and individuals manually producing liquors also have the following rights and obligations:

a) To join the association of traditional liquor production villages in case they reside in the same locality with such a village;

b) To make business registration under Clause 2 of this Article and apply for licenses for manual liquor production under Clause 3 of this Article;

c) To comply with regulations on environmental protection; food quality, safety and hygiene standards; and labeling of liquor production under this Decree.

Article 17. Manual liquor production for producers consumption

1. Organizations and individuals manually producing liquors for their own consumption may not sell these liquors on the market.

2. Organizations and individuals manually producing liquors for their own consumption shall comply with regulations on environmental protection in liquor production, and are responsible for food quality, hygiene and safety standards applicable to their liquor production.

Chapter III

LIQUOR TRADING

Article 18. Conditions on grant of liquor trading licenses

1. Conditions on a trader to be granted a liquor wholesale or wholesale agency license include:

a) Being an enterprise lawfully established and having made business registration for liquor trading;

b) Having a fixed place of business with a clear address, which ensures technical, facility and equipment requirements set by the Ministry of Industry and Trade;

c) Having a storage satisfying requirements on liquor quality preservation, environmental protection, and fire and explosion prevention and fight;

d) Having a distribution system.

2. Conditions on a trader to be granted a liquor retail or retail agency include:

a) Having made business registration for liquor trading;

b) Satisfying requirements on liquor quality preservation and fire and explosion prevention and fight.

Article 19. Liquor trading licenses

1. The Ministry of Industry and Trade shall guide in detail the order, procedures and competence for the grant of liquor wholesale or wholesale agency licenses, liquor retail or retail agency licenses.

2. Traders may conduct liquor trading activities from the date they are granted the licenses.

3. Traders with liquor production licenses may organize systems for distribution of their products without having to apply for liquor wholesale or retail licenses.

Article 20. Rights and obligations of liquor traders

Apart from the rights and obligations provided for by law, liquor traders also have the following rights and obligations:

1. To buy liquors of lawful origin.

2. To organize the liquor circulation and sale on the market according to their liquor trading licenses.

3. To wholesale liquors only to traders with liquor trading licenses.

4. To organize shops for retailing liquors to consumers. Not to sell liquors to persons aged under 18.

5. To post up valid copies of their liquor trading licenses as well as categories and prices of liquors on sale at all their places of business.

6. To comply with regulations on invoices, vouchers, accounting books and send periodical reports on business activities to the state management agency that has granted liquor trading licenses to them in strict accordance with law.

Article 21. Liquor import

1. Imported liquors include finished liquor products which are bottled, or packaged in boxes or cartons for instant sale and liquors in the forms of essence and auxiliary materials for the preparation of finished liquor products in Vietnam.

2. Imported liquors must be accompanied with lawful import documents under current regulations and stuck with import liquor stamps issued by the Ministry of Finance.

3. Imported liquors must be labeled in accordance with law.

4. Only enterprises with liquor production licenses or liquor wholesale licenses may directly import or entrust other entities to import liquors. They are responsible for ensuring the imported products satisfaction of food quality, hygiene and safety standards.

5. For liquor products imported for the first time into Vietnam, importers shall obtain a competent state agencies certification of satisfaction of food hygiene and safety requirements for inspected samples of imported products before carrying out import procedures.

6. Traders importing liquor essences and auxiliary materials for the preparation of finished liquor products may only sell these imports to enterprises with liquor production licenses.

7. Liquors may only be imported into Vietnam through international border gates.

Article 22. Rights and obligations of liquor importers

Apart from the rights and obligations provided for by law, liquor importers also have the following rights and obligations:

1. To organize systems for distribution of liquors they directly import or sell imported liquors to traders with liquor wholesale or wholesale agency licenses.

2. To send reports reviewing the liquor import, distribution and sale to the Ministry of Industry and Trade under the latter’s guidance.

Article 23. Smuggling and trade fraud prevention and combat

1. Fake liquors, imitate liquors, smuggled liquors and liquors not up to prescribed food quality, hygiene and safety standards must all be confiscated for destruction.

2. Organizations and individuals trading in liquors are obliged to collaborate with competent state agencies in preventing and combating liquor smuggling and fraud in liquor trading.

Chapter IV

STATE MANAGEMENT RESPONSIBILITIES

Article 24. Responsibilities of the Ministry of Industry and Trade

1. To submit to the Government or the Prime Minister for promulgation, or promulgate according to its competence legal documents on liquor production and trading.

2. To coordinate with ministries, branches and localities in controlling and managing liquor production and trading under the master plan on development of the beer, liquor and beverage industry.

3. To perform the state management of the liquor industry in its construction investment in accordance with law and this Decree.

4. To guide the elaboration and application of Vietnam standards, application of manufacturer standards and prescribe procedures for registration of manufacturer standards.

5. To organize the line management of quality of liquor products, food hygiene and safety and industrial safety.

6. To specify the competence, order and procedures for the grant, modification and withdrawal of liquor production licenses, licenses for manual liquor production, liquor wholesale or wholesale agency licenses, liquor retail or retail agency licenses.

7. To inspect and examine the observance of liquor production master plans, regulations on product quality, food hygiene and safety, environmental protection by liquor production establishments; to settle complaints and denunciations and handle illegal acts in liquor production and trading.

8. To assume the prime responsibility for, and coordinate with concerned functional agencies in, organizing inspections for detecting and handling other violations in liquor trading.

9. To coordinate with functional state agencies in organizing the confiscation and destruction of smuggled, fake, imitation or inferior-quality liquor products or those with expired use durations, bearing trademarks not protected in Vietnam, neither properly labeled nor stuck with stamps.

10. To coordinate with other entities in organizing the dissemination and public information for the implementation of this Decree.

Article 25. Responsibilities of the Ministry of Finance

To assume the prime responsibility for, and coordinate with concerned ministries and branches in, prescribing the sticking, printing and issuance of imported liquor stamps and managing the use of these stamps. To study and elaborate a schedule of sticking stamps on domestically produced liquors.

Article 26. Responsibilities of the Ministry of Health

1. To draft and submit to the Government or the Prime Minister for promulgation legal documents on food hygiene and safety, prevention and control of harms of liquor abuse.

2. To inspect and supervise the observance of regulations on food hygiene and safety and prevention and control of harms of liquor abuse.

3. To coordinate with concerned agencies in detecting, inspecting and handling establishments producing fake liquors or trading in smuggled liquors or failing to ensure food hygiene and safety.

4. To specify the competence, order and procedures for the grant, modification and withdrawal of certificates of satisfaction of food hygiene and safety for liquor products of organizations and individuals.

5. To assume the prime responsibility for, and coordinate with concerned ministries and branches in, elaborating and promulgating regulations on management of medicated liquor production and trading.

Article 27. Responsibilities of ministries, ministerial-level agencies and government-attached agencies

Ministries, ministerial-level agencies and government-attached agencies shall, within the scope of their powers and under the Governments assignment, coordinate with the Ministry of Industry and Trade in performing the state management of liquor production and trading, disseminating the Decree on liquor production and trading for its effective enforcement.

Article 28. Responsibilities of provincial)municipal Peoples Committees

1. To perform the state management of the liquor industry in their respective localities. To manage and solve problems of the liquor industry falling under their competence.

2. To direct local liquor production establishments in strictly observing the master plan, ensuring the achievement of the set objectives and development orientations.

3. To elaborate, appraise and approve master plans on development of the beer, liquor and beverage industry in their localities, including planning on liquor production and traditional liquor production villages; to evaluate and decide on recognition of traditional liquor production villages.

4. To inspect the liquor production, circulation and sale in their localities.

5. To supervise and inspect the implementation of the master plan, product quality standards, food safety and hygiene, and fulfillment of tax obligations toward the State, labor safety and environmental protection in liquor production enterprises, and handle violations in their localities in accordance with law.

6. To organize the implementation of the master plan on development of the beer, liquor and beverage industry and the provisions of this Decree, and disseminate and educate about them among people for their strict observance in liquor production.

7. To conduct public information and education about harms of liquor abuse and use of liquors with high contents of toxic ingredients in order to improve public awareness about the necessity to gradually replace them with high-quality liquors up to the prescribed food quality, hygiene and safety standards.

8. To direct local administrations at all levels in identifying causes of liquor poisoning in their localities and taking remedial measures according to their competence.

Chapter V

VIOLATIONS AND HANDLING THEREOF

Article 29. Acts of violation of legal provisions on liquor production and trading

1. Producing or trading in liquors without licenses granted by competent state agencies.

2. Producing, buying or selling smuggled or fake liquor products, liquor products with imitation marks or bottle designs or not up to quality standards prescribed by law.

3. Circulating or selling liquor products without package labels or product quality registrations, or imported liquors not stuck with stamps in accordance with law.

4. Trading in liquors outside permitted places or at variance with granted liquor trading licenses.

5. Forging, erasing, modifying, lending, leasing, transferring, buying or selling liquor production or trading licenses.

6. Trading in liquors at places banned from business by law.

7. Retailing liquors by slot machines.

8. Selling liquors to people aged under 18 years.

9. Conduct liquor advertisement or sales promotion in contravention of law.

10. Sponsoring cultural, artistic, sport, entertainment, recreation, healthcare and other social activities associated with advertisements of liquor products.

11. Offering liquors as prizes of contests, except for liquor contests.

12. Failing to report or reporting on liquor production or trading at variance with regulations of competent state agencies applicable to liquor producers or traders.

13. Other illegal acts specified by law.

Article 30. Handling of violations

Organizations and individuals that commit acts of violation of legal provisions on liquor production and trading shall, depending on the nature and severity of their violations, be disciplined, administratively sanctioned or examined for penal liability. If causing material damage, they shall pay compensations in accordance with law.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 31. Transitional provisions

1. Within six months after the effective date of this Decree, organizations and individuals that are conducting liquor production on an industrial scale shall carry out procedures for applying for liquor production licenses; organizations and individuals that are conducting manual liquor production for commercial purposes shall carry out procedures for registration of the manual liquor production business under this Decree.

2. Within six months after the effective date of this Decree, organizations and individuals that are acting as liquor wholesalers, wholesale agents, retailers or retail agents shall carry out procedures for applying for liquor wholesale, wholesale agency, retail or retail agency licenses under this Decree.

Article 32. Implementation effect

This Decree takes effect 15 days after its publication in CONG BAO and replaces all previous stipulations which are contrary to it.

Article 33. Organization of implementation and implementation responsibilities

1. The Ministry of Industry and Trade shall coordinate with concerned ministries and branches in guiding the implementation of this Decree.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies and presidents of provincial/municipal Peoples Committees shall implement this Decree.